Georgia Senate Bill SB2

Georgia 2025-2026 Regular Session

• Introduced: 1/13/25
• Refer: 1/14/25
• Report Pass: 2/6/25

Caption

State Income Tax; exclude tips from taxation

Impact

Once passed, SB2 would significantly impact how tips are treated in Georgia's state income tax system. Specifically, all tips received by employees would no longer be taxable, provided such income is already reported on their federal tax returns. This exclusion is framed within a broader context of supporting service employees, particularly those in lower-wage sectors where tips can constitute a substantial portion of their earnings. The effective date of implementation is set for July 1, 2025, and it will apply to all taxable years starting from January 1, 2025.

Summary

Senate Bill 2 aims to amend Georgia's income tax laws by excluding tips received by employees from taxable income. This legislative effort seeks to adjust the tax code to account for the unique income structure of many service industry professionals who rely heavily on gratuities. By defining tips and establishing the requirement for employers to report the total amount received by employees, the bill intends to create a clearer framework for handling this type of income under state tax laws.

Contention

While supporters of SB2 may argue that this is a vital step toward fairer taxation for service workers, the bill could be met with contention from various stakeholders. Critics may express concerns over the potential fiscal implications for state revenue, as the exclusion of tips from taxable income could significantly affect overall tax collections. Furthermore, there may be debates regarding the administrative burdens placed on employers tasked with reporting tip income accurately. The balancing act of promoting fairness for employees while maintaining adequate state revenue is expected to be a focal point of discussion as the bill progresses.